Pur Autre Vie

I'm not wrong, I'm just an asshole

Friday, February 19, 2016

A Simple Theory of Beer Week

It is apparently beer week in New York.  And yet I don't care at all.  Partly this is because I am taking a little break from drinking, but also it reflects the fact that beer week has little observable effect on the beer scene in the city.  If anything, it invites unpleasant crowds.

I don't think this is necessarily true in other cities, and I have a theory about why.  Let's start with Adam Smith's observation that "the division of labour is limited by the extent of the market."  Extending this concept slightly, imagine that each member of a population has preferences ranging from very common ones to very uncommon ones.  And imagine that it takes a critical mass of customers to support a business.  Then you should expect small towns to have businesses that appeal to common tastes, while big cities should be able to support more specialized, esoteric businesses along with the common ones.  It's not that urbanites are necessarily more eclectic in their tastes, though they may be.  It's that if 1% of the population likes a particular kind of food, then there are 100 potential customers in a town of 10,000 but 80,000 potential customers in New York City.

But spatial concentration isn't the only way to obtain a critical mass of consumers.  You can also concentrate consumption at a particular time.  A town can hold a festival or a fair, at which unusual foods are served.  Partly the town might just be attracting consumers from a large geographical area, essentially turning into a bigger city for a day or two.  But another way to think about it is that people might want certain foods only infrequently.  Imagine that each resident wants Greek food only once every 12 months.  In New York City this would mean 666,666 visits to Greek restaurants every month - enough to support a lot of Greek restaurants.  But in a town of 1,000 people, it would only support 83 visits per month.

But if you coordinated it so that a Greek food vendor only comes to town once a year, during a festival, then all 1,000 residents will be ready for Greek food, and the vendor can make enough profit for the visit to be worth his while.  By concentrating its demand into a small period of time, the town is, very briefly, punching way above its weight in terms of demand for Greek food.  This may be the only way the town will ever consume any Greek food, since it can't support a Greek restaurant on a permanent basis.

And so it is with beer week.  Ordinarily, a city might support a limited variety of beers.  But during beer week, the city can temporarily support a much bigger range of beers.  If you usually drink wine, but you occasionally like to drink beer, then beer week is the right time for you to drink beer.  And if you normally drink a common beer style, but occasionally crave something more adventurous—again, beer week is the perfect time to find something new.  This surge of demand for beer can make it profitable to sell even relatively unpopular styles, and so the variety and quality of beers might be excellent.

But New York just doesn't need to do that.  There are already far too many beers for a person to try.  Beer week has negative aspects, as well.  It draws novices into the market, with their unrefined tastes.  It causes congestion.  It invites hype and "whale-chasing" (buying a beer merely because it is rare).  In other words, New York is probably already "too big" in terms of the optimal beer market.  Concentrating its demand even further is pointless and counterproductive.


Anonymous Anonymous said...

In contrast, if beer week inspires people to spend a bit more, it might allow stores or bars to procure beers that would otherwise be to pricey to stock on a regular basis. For example, if anticipating beer week they had someone drive a white panel van to CA, fill it up with Russian River and then drive it back to NY. Then they can sell them at $35 a bottle. People wouldn't normally pay prices that support that, but maybe they would during beer week. If you get something like this, then beer week is interesting even in NY.

10:55 AM  

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